EXHIBIT 99.1
EMRISE
NEWS CORPORATION
9485 Haven Avenue Suite 100
Rancho Cucamonga, CA 91730
(909) 987-9220 o (909) 987-5186
www.emrise.com
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FOR IMMEDIATE RELEASE
CONTACT:
Randolph D. Foote, CFO Matt Hayden/Brett Maas
EMRISE CORPORATION Hayden Communications
(909) 987-9220 ext. 3201 843-272-4653
EMRISE CORPORATION ANNOUNCES FINANCIAL RESULTS FOR 2005 SECOND QUARTER
RANCHO CUCAMONGA, CALIFORNIA, August 16, 2005 - EMRISE CORPORATION (PCX: ERI), a
multi-national manufacturer of defense and aerospace electronic components and
subsystems and communications equipment, today announced financial results for
the three and six months ended June 30, 2005. This press release has been
delayed as a result of a local power failure on Monday, August 15, which
resulted in the loss of computer systems and telephones.
For the quarter ended June 30, 2005, EMRISE reported net sales of $10.0 million,
an increase of $3.6 million, or 56%, compared to $6.4 million reported in the
second quarter of 2004. The increase in net sales included $1.4 million of
revenues attributable to the July 2004 acquisition of Larus Corporation (Larus)
and $3.0 million attributable to the March 2005 acquisition of Pascall
Electronics Ltd.(Pascall). Also, during the 2nd quarter, Pascall shipped
$835,000 of product of which we were unable to recognize revenue or income, even
though the customer has paid for the product because we stored the product at
the customer's request in our facility. We will discontinue storing the product
for the customer in the 3rd quarter, which would allow us to record the revenue
and net income of approximately $311,000. Increases in sales were partially
offset by a $676,000 reduction in the sales of power supplies by XCEL Power
Systems Ltd. (XPS) due to a shipment deferral for the Eurofighter Typhoon
aircraft, a $154,000 reduction in sales of communications test equipment to U.S.
public carriers and a reduction of $199,000 of network access product revenues
due to delays in a French military communications infrastructure program.
Gross profit increased by $1.1 million or 38% to $4.0 million from $2.9 million
in the 2nd quarter of 2004, mainly resulting from contributions from both
Pascall and Larus. Selling and administrative expenses increased by $1.4
million, or 67%, to $3.4 million from $2.0 million in the prior year also
primarily due to the acquisitions. Engineering and development expenses
increased 94% to $604,000 from $312,000, which
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was mainly derived from product development costs for the Larus carrier class
network timing and synchronization product, our Digitran Division's low profile
rotary switches and new product engineering at Pascall. During the 2nd quarter
of 2005, we incurred $119,000 of severance expenses from the integration of the
CXR Larus communications equipment operations, an increase of $161,000 for
U.S.-based legal and accounting fees during the previous year and $55,000 in
building repair expenses associated with the consolidation of the Company's coil
winding operation and closing of its Wales facility. These expenses totaling
$335,000 are not expected to repeat in subsequent quarters, but would have
contributed $335,000 to our 2nd quarter net income results. Pascall's net income
recognition shift into the 3rd quarter would also have contributed $311,000 to
our 2nd quarter bringing potential net income for the 2nd quarter to a total of
$670,000 or 2(cent) per fully diluted share.
EMRISE reported net income of $24,000 which was $345,000, or 93%, less than the
net income of $369,000 of the second quarter of 2004. Diluted and basic earnings
per share were $0.00 as compared to $0.02 in the second quarter of 2004. The
$311,000 net income deferred from storing product shipped by Pascall and stored
at Pascall's facility which should be recognized in the 3rd quarter, would have
brought our 2nd quarter to a total of $335,000 net income or 1(cent) per fully
diluted share.
For the six months ended June 30, 2005, EMRISE reported net sales of $17.3
million, an increase of $4.7 million, or 37%, compared to the $12.6 million
reported in 2004. This included $2.9 million of net sales attributable to the
acquisition of Larus and $3.8 million attributable to the acquisition of Pascall
excluding $835,000 shipped but not recognized in the 2nd quarter. These
increases in sales were partially offset by a $1.4 million reduction in the
sales of power supplies by XPS and a $538,000 reduction in our sales of network
access equipment in Europe due to delays in the Eurofighter Typhoon aircraft
program and French military communications infrastructure programs,
respectively.
Gross profit increased by 27% to $7.1 million from $5.6 million in the prior
year period due to the inclusion of Pascall and Larus. Selling and
administrative expenses increase by $2.0 million, or 47%, to $6.3 million from
$4.3 million in the prior year also primarily as a result of the acquisitions.
Engineering and development expenses increased 91% to $1,136, 000 from $595,000
attributable to product development discussed earlier in this press release.
EMRISE reported a net loss of $326,000 which was $765,000, or 175%, less than
the net income of $439,000 for the first six months of 2004. Diluted and basic
loss per share were $0.01 as compared to earnings of $0.02 per share in the
first six months of 2004. Without Pascall's net income contribution of $311,000
deferred into the 3rd quarter our first six months would have been a $15,000
loss.
EMRISE's backlog increased 127% to a record $17.5 million at June 30, 2005
(including $8.4 million of backlog relating to the business of Pascall),
compared to $7.7 million at December 31, 2004. Excluding Pascall, the Company's
backlog increased $600,000 or 8% despite greater shipments in the first half of
2005 compared to 2004. Pascall's backlog increased 88% from March 31, 2005 after
the March 18 acquisition. Backlog is converted to revenue typically over a 3
month period.
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Carmine T. Oliva, President and Chief Executive Officer of EMRISE CORPORATION,
commented, "We made significant progress in continuing to integrate CXR Larus
and CXR Anderson Jacobson in France and believe we are just starting to see the
benefits of combining the company from both a product and sales perspective.
Discounting the extraordinary items impacting this quarter's operating results,
our reported net income is beginning to show insight into the improvements we
expect to report in the second half of this year and for 2006. Going forward, we
believe we will continue to see an acceleration of organic growth, benefiting
our revenues, backlog and visibility. We anticipate that revenue from our
traditionally seasonally weak third quarter will exceed our second quarter
revenue for the first time and contribute a potential $1 million net income. We
believe our third quarter results should provide further credibility for our
full-year guidance of $47 million revenue and $0.10 to $0.12 per share earnings,
after tax."
EMRISE's cash position was $6.4 million as of June 30, 2005 compared to $1.0
million as of December 31, 2004, primarily due to net proceeds of EMRISE's
common stock financing in January 2005, offset by approximately $10 million used
to acquire Pascall. EMRISE's working capital position was $13.9 million as of
June 30, 2005 compared to $5.5 as of December 31, 2004 due to the financing and
inventory and accounts receivables related to the Pascall acquisition, while
current liabilities increased by $1.1 million to $9.7 million as of June 30,
2005 compared to those reported on December 31, 2004. Stockholders' equity
increased $15.5 million or 142% to $26.4 million as of June 30, 2005 from $10.9
million as of December 31, 2004 due to net proceeds from EMRISE's common stock
financing.
SECOND QUARTER 2005 IN REVIEW:
EMRISE COORPORATION successfully completed several key initiatives during the
quarter including the final integration of its CXR Anderson Jacobsen (CXR-AJ)
management structure into CXR Larus Corporation with significant cost savings
and new business across the organization including for its recent acquisition of
Pascall.
o In June as part of the Company's continuing strategy to strengthen and
expand its communications business, EMRISE completed the integration of the
organization structure of CXR Larus Corporation and CXR-AJ located in
France as a single communications business under the sole leadership of the
president of CXR Larus Corporation located in San Jose, CA. As part of the
integration, the Company anticipates realizing human resource
consolidations that will provide a first-year cost savings of approximately
$750,000 starting in July and an on-going annual cost savings of
approximately $1 million per year thereafter. All remaining severance
totaling approximately $119,000 was accrued in June 2005.
o Xcel Power Systems Ltd. was awarded a $1.8 million order from Smiths
Aerospace for power supplies for Multi-Function Displays for BAE Systems'
latest Hawk Trainer aircraft. Additionally, BAE Systems' Electronic Warfare
Division placed an initial order in excess of $750,000 for power
conditioning modules for their Towed Decoy upgrade to the electronic
warfare Defensive Aids Sub System Suite for retrofit on the 120 aircraft
that were part of the first build of the Eurofighter Typhoon aircraft and
ultimately to be included in the current build of 230 new aircraft.
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o Pascall has been awarded a contract to produce approximately $1 million of
radio frequency (RF) receiver modules for a Transponder Landing System
(TLS(R)) designed by Advance Navigation and Positing Corporation (ANPC).
The system provides a precision handling approach capability for aircraft
where rough terrain interferes with the radio transmissions produced by
conventional navigation aids. Pascall also received the Top Supplier Award
from Rockwell Collins. This preferred supplier award recognizes Pascall's
on-time delivery, product quality and customer support. This is the 6th
consecutive year Pascall has received this award from Rockwell Collins its
largest customer for in-flight entertainment systems.
o EMRISE Electronics Corporation's Digitran Division received a $1 million
development contract for custom Digitran (R) Rotary Switches for use in
Armament Launch Controllers aboard a variety of U.S. Naval ships. The
Digitran Division also received approval to perform qualification testing
of military switches by the U.S. Department of Defense. This authorization
will reduce the lead time and lower the cost to qualify both Digitran's
digital switches and its new very low profile (VLP(R)) rotary switches in
military and aerospace applications.
o CXR Larus Corporation received $420,000 in additional orders for its new
StarClock(TM) 100 Network Timing and Synchronization System for Deployment
by Taiwan's primary telecommunications public network service provider.
This brings the order run rate for delivery to Taiwan for the previous six
months to nearly $1 million and we believe this run rate will likely
continue into the second half of 2005.
SUBSEQUENT TO THE END OF THE QUARTER:
EMRISE CORPORATION's common shares began trading on the Archipelago ExchangeSM
under the new ticker symbol "ERI". This listing on (ArcaEx(R)) is a regulated
national exchange listing and may broaden EMRISE's potential private and
institutional investor base because many private and institutional investors
will only purchase stock of a company that is quoted on a regulated national
exchange or Nasdaq. A national listing on ArcaEx will provide the opportunity
for those investors to participate in ownership of EMRISE stock.
TELECONFERENCE INFORMATION
To participate in the conference call scheduled for Tuesday, August 16, 2005 at
11:30 a.m. EDT (8:30 a.m. PDT), dial the following phone number 5 to 10 minutes
prior to the scheduled conference: 877-407-9210. International callers should
dial 201-689-8049. There is no pass code required for this call.
This conference call will also be broadcast live over the Internet and can be
accessed at www.vcall.com. To listen to the live call, go to the Web site at
least 15 minutes prior to the start of the call to register, download and
install any necessary audio software.
For those unable to participate during the live broadcast, a replay will be
available shortly after the call on the Vcall site for 90 days. Also, for 24
hours after the conference call, a replay will be available by dialing the
toll-free number 877-660-6853 or, for international callers, dialing
201-612-7415. The conference ID number "152369" and account number "286" should
be used to access the recording by phone.
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ABOUT EMRISE CORPORATION
EMRISE CORPORATION is a multi-national manufacturer of defense and aerospace
electronic components and subsystems and communications equipment. EMRISE's
electronic components group, which includes EMRISE Electronics Corporation and
its international subsidiaries, provides custom power conversion and RF
component and subsystem products, digital and rotary switches and subsystem
assemblies to the North American, European and Asian electronic components
market that are primarily used for defense, aerospace and industrial
applications. EMRISE's communications group, consisting of CXR Larus Corporation
and CXR-Anderson Jacobson, provides network access and transmission products,
communications timing and synchronization products and communications test
equipment to the North American, European and Asian communications market.
Founded in 1983, EMRISE operates out of facilities in the United States,
England, France and Japan. As of July 31, 2005, EMRISE had a total of 301
employees in its various subsidiaries and divisions. EMRISE's Internet address
is www.emrise.com.
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995
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With the exception of historical information, the matters discussed in this
press release, including, EMRISE's anticipation that it will achieve
approximately $11 million in net sales for the second quarter of 2005,
approximately $47 million in total net sales for 2005 and earnings per share of
approximately $0.10 to $0.12 for 2005 and that its results of operations in 2005
and beyond will be bolstered by positive contributions from business, including
non-military business, acquired or resulting from the Pascall and Larus
acquisitions as well as by the various products, arrangements, relationships and
planned integration and sales and marketing activities described above, and
EMRISE's anticipation that completed and pending acquisitions will improve
future net income and earnings per share are forward-looking statements that
involve a number of risks and uncertainties, the ability of Pascall to meet the
accounting requirements to record $835,000 in sale and $311,000 in net income by
shipping goods it has sold to and stored for its customer and that EMRISE will
achieve revenue greater in the 3rd quarter than the 2nd quarter and $1 million
net income. The actual future results of EMRISE could differ from those
statements. Factors that could cause or contribute to such differences include,
but are not limited to, EMRISE's ability to identify and successfully negotiate,
fund and integrate recent and future acquisitions and to improve operating
efficiency and realize anticipated synergies, measurably lowered costs and
increased profitability due to the integration and growth of recently acquired
or potentially acquirable businesses, the receipt and timing of contracts and
orders from existing and potential customers for EMRISE's products and services,
EMRISE's ability to fulfill delayed and backlog orders, market and economic
conditions, changes in technology and governmental regulations and policies,
competitive products and services, unforeseen technical issues, unexpected
changes in typical seasonal sales trends and those factors contained in the
"Risk Factors" Section of EMRISE's latest Form 10-K and other public filings.
# # #
Tables follow
EMRISE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
Three Months Ended Six Months Ended
June 30, June 30,
2005 2004 2005 2004
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(in thousands except per share amounts)
Net sales $9,968 $6,432 $17,267 $12,624
Cost of sales 6,001 3,533 10,188 6,978
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Gross profit 3,967 2,899 7,079 5,646
Operating expenses:
Selling, general and administrative 3,447 2,067 6,278 4,284
Engineering and product development 604 312 1,136 595
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Income (loss) from operations (84) 520 (335) 767
Other income (expense)
Interest expense (94) (94) (196) (190)
Interest income 37 -- 109 --
Other income (expense) 116 (30) 113 (36)
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Income before income taxes (25) 396 (309) 541
Income tax expense (49) 27 17 102
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Net income $24 $369 $(326) $439
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Earnings per share:
Basic $0.00 $0.02 $(0.01) $0.02
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Diluted $0.00 $0.02 $(0.01) $0.02
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EMRISE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, Dec 31,
2005 2004
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Current assets:
Cash and equivalents $ 6,435 $ 1,057
Accounts receivable 7,501 5,796
Inventories 8,597 6,491
Prepaid expenses and other 1,051 769
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Total current assets 23,584 14,113
Property, plant and equipment, net 2,079 909
Goodwill, net and other intangibles 14,430 9,441
Other assets 573 623
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$ 40,666 $ 25,086
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Liabilities and stockholders' equity:
Current liabilities:
Borrowing under lines of credit $ 811 $ 878
Current portion of long-term debt 1,392 711
Accounts payable 3,171 3,398
Income tax payable 586 572
Accrued expenses 3,714 3,014
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Total current liabilities 9,674 8,573
Long term debt, less current portion 2,322 3,235
Deferred Taxes 1,420 1,400
Other liabilities 888 969
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Total liabilities 14,304 14,177
Stockholders' equity
Preferred stock -- --
Common stock 123 82
Additional paid in capital 43,242 26,746
Accumulated deficit (16,732) (16,406)
Accumulated other comprehensive income (271) 487
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Total stockholders' equity 26,362 10,909
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$ 40,666 $ 25,086
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